A Dubuque-headquartered furniture manufacturer reported strong first-quarter earnings and aims to further ramp up production.
After ceasing manufacturing operations in Dubuque in 2020, however, Flexsteel Industries’ efforts to increase capacity largely are focused internationally, with a growing manufacturing presence in Mexico driving the initiative.
Company leaders on Tuesday discussed solid results from the company’s first quarter, which ended Sept. 30.
Flexsteel reported net sales of $137.7 million in the opening quarter, an increase of 31% compared to the same stretch in the previous year. The company reported net income of $4.4 million for the quarter, compared to net income of $3.9 million in the same quarter last year.
On the heels of this strong start, President and CEO Jerry Dittmer expressed a desire to keep the momentum rolling.
“Given my confidence in our team and our strong growth momentum, we are aggressively working on plans and investments to expand capacity and to both fulfill current backlog and support future growth,” he said in a conference call Tuesday morning.
Dittmer noted that the company’s new manufacturing plant in Juarez, Mexico — its third such facility in that city — started operations in July and is “ramping up production.” Meanwhile, construction has started on a new facility in Mexicali, Mexico, and that plant is expected to be completed in June.
Some strategic investments have been made in the U.S. as well, most notably a distribution center that opened earlier this month in Greencastle, Pa.
The global nature of the furniture industry was evident throughout Tuesday morning’s discussion.
Flexsteel officials noted that the spread of the COVID-19 delta variant has significantly slowed production in Vietnam, which serves as a key manufacturing hub for many of Flexsteel’s competitors in the furniture industry. This development presents opportunity for Flexsteel.
“We expect that the strength of our inventory position will be a competitive advantage and a source of additional revenue growth in the coming quarters,” Chief Financial Officer and Chief Operating Officer Derek Schmidt said.
Schmidt said Flexsteel is targeting sales growth between 15% to 20% for the remainder of the fiscal year but cautioned that this growth is contingent on global supply-chain conditions.
Dittmer also acknowledged potential economic headwinds, specifically identifying supply-chain concerns and inflation. But he emphasized that consumer demand remains strong and most economic indicators suggest it will stay that way.
“Consumer spending appears healthy, and trends in new housing, geographical migration and generational shifts are all positive for long-term home furnishings growth,” Dittmer said. “Both our retail and e-commerce customers remain relatively bullish on business conditions.”